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VI. OFFICE DEMAND
Office development in Everett can respond to the needs of businesses serving a larger
region or employers serving iocal residents and businesses. Future demand for office
development is presented in this section in terms of:
Regional Market Conditions
Everett Market Conditions
Downtown Market Conditions
Projected Demand
REGIONAL MARKET CONDITIONS
Everett represents a small portion of the Seattle/Puget Sound office market. Data on
office market conditions in the region are collected and monitored closely by several
major real estate brokerage firms. Table Vi-l summarizes the most recent data published
by CoStar Group.
Table Vl-1
Seattle/Puget Sound Office Market
Overview 'lst Quarter 2005
No. of Total Vacant Vacancy Average
Submarket Buildings Sq Ft Sq Ft Rate Rent Rate"
Seattie Downtown 503 43,467,716 4,706,082 10.83% $25.08
Eastside 646 27,239,672 2,984,480 10.96% $22.94
Northend 171 6,152,226 681 ,331 11.07% $20.34
Southend 289 12,300,526 2,501,509 20.34% $19.47
Tacoma 133 4,784,864 518,949 10.85% $17.97
Total 1,742 93,945,004 11,392,351 12.13% $23.05
Sources: OfficeSpace.com (Excludes owner-occupied buildings. government buildings, and buildings under
construction or proposed). April 2005
* Full-service rent
As shown in the tabte, CoStar Group reported 94 miliion square feet of space in the office
inventory as of the first quarter of 2005. The two major subareas are Downtown Seattle
and the Eastside. Overall vacancy in the region is 12.l%, ranging from a high of 20.3%
in the Southend to a low of 10.8% in both the Seattle Downtown and Tacoma
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submarkets. Substantial absorption occurred in the Eastsidc, Southend and Tacoma
submarkets during the first quarter of 2005, while Downtown Seattle experienced a
significant net loss of occupied space. Such negative absorption is not likely to continue
in the near term as the regional economy improves. 1.15 miliion square feet of new space
is under construction in Downtown Seattle, represented primarily by the Washington
Mutual building (900,000 square feet).
EVERETT MARKET CONDITIONS
The CoStar Group inciudes Everett office statistics in the Northend submarket, which is
summarized in Table VI-Z below.
Table Vl-2
Everett Office Market Conditions
2001 - 2005
No. of Total Vacant Vacancy Average
Time Period Buildings Sq Ft Sq Ft Rate Rent Rate
2001 Year-end 41 £543,388 284.001 17.11% $19.05
2002 Year-end 51 £845,341 236,122 12.81% $18.89
2003 Year-end 57 t,993,962 240,750 12.07% $19.93
2004 Year-end 60 £963,455 160.370 8.17% $19.73
2005 First Quarter 59 1,916,013 168,131 8.78% $19.73
Sources: OfficeSpacecorn (Excludes owner~occupied buildings, government buiidings, and buildings
under construction or proposed}. April 2005
* Fu||~service rent
As indicated above, there are 59 office buildings in the Everett submarket, containing a
total of 1.92 million square feet of rentable area. Overali vacancy was 8.8% as of the first
quarter of2005, representing a decline during the past four years from a high of 17.1% in
iate 2001. The average rental rate is $19.73 per square foot. Two projects are under
construction, both located outside the downtown market, which will add an additional
76,000 square feet of office space.
LOCAL MARKET CONDITIONS
Characteristics of the major office buildings in downtown Everett are summarized in
Table Vl-3.
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Table Vl-3
City of Everett
Characteristics of Existing Office Buildings
Buildings with 15,000+ Square Feet
Actual or
Map Year No. of Size Availabie % Asking
No. ldentilicationitocation Built Stories {Sq Ft) Space Available Rent ($lSF)
1 Bank of America Bldg. 1966 7 47,647 7,418 16% 81000-31500
1604 Hewitt Ave.
2 Cascade Bank Buiiding 1920/77 4 48,583 0 0% $17.50
2828 Colby Ave.
3 Central Buiiding 1924 6 32,004
1721 Hewitt Ave.
4 Coastai Community Bank Bldg. 1920 3 40,000 4,226 11% $10.00-$1500
2815 Colby Ave.
5 Culmback Building 1924 3 16,000
3015 Colbyr Ave.
6 Everett Mutual Tower 1994 14 145,223 9,915 7% $14.00-$18.00
2707 Colby Ave.
7 Frontier Bank Bldg. 1994 5 43,000 1,200 3% 61400-81800
2825 Colby Ave.
8 Medical 8 Dental Bidg. 1925 7 100,000 26,765 27% $12.00
2722 Colby Ave.
9 Henry Cogswell College Bldg. 1926/94 5 98,240 0 0% 6700-82000
2802 Wetmore Ave.
10 Roberts Bldg. 1996 2 19,250 9,625 50% $14.50 Net
3120 McDougall Ave.
11 Ruoker Building 1987 3 69,300
3020 Rucker Ave.
12 Stokes Bldg. 1910/99 4 20,000 0 0% $15-$18 Net
1620 Hewitt Ave.
13 Wall Street Bldg. 1980 10 67,600
2930 Wetmore Ave.
14 Wetmore Bldg. 1987 4 60,000 23,761 40% $10.00~$15.00
2731 Wetmore Ave.
15 Marion 8uilding 1895/68 4 23,040 0 0% 81100-32100
1401 Hewi1t72829 Rucker Net
Total 849,887
Asking rents quoted on full service basis uniess noted Olhenrvise
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Figure Vl-1
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The downtown area consists of several modern iow- to mid-rise office structures,
interspersed with older commercial buildings, many of which are nearing the end of their
economic life. in addition to the privately-owned facilities, there are city, county, and
federal buildings clustered primarily near the south end of the downtown zone.
As indicated in Table V1-3, there are 15 office buildings downtown with more than
15,000 square feet of building area. The most recent development consists of two
buildings completed in 1994. Everett Mutual Tower, the largest project in downtown
Everett, contains 145,000 square feet of office space on 14 floors. The Frontier Bank
Building has 43,000 square feet of office space, plus I 1,000 square feet of retail and eight
apartments. Absorption of the newer buildings is equivalent to 16,000 square feet per
year since 1994.
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Rental rates for office space varies dramatically between approximateiy $10.00 and
$21.00 per square foot. Class A space generally falls in the range of $ 14.00 to $18.00 per
sq it, while Class B product typically falls more in the range of $10.00 to $15.00 per
square foot.
The current vacancy rates vary from 0% to 50%. The average rate for buildings reporting
vacancy was 13%.
The only new major office development in downtown is limited to Snohomish County’s
Campus Redevelopment initiative, which was completed in June 2005. This project
consisted of construction of a new 160,000 square foot county office building, located
east of the existing County administration building. Other improvements include a new
parking garage for 1,200 vehicles and expansion of the county jail facilities. Completion
of this project ailowed the county to consolidate 800 employees working in i8 teased
offices scattered throughout downtown. Such consolidation and resulting departure from
numerous locations will likeiy result in an increase of approximately 200,000 square feet
in vacant office space in Downtown Everett.
COMPETITIVE REGIONAL OFFICE DEVELOPMENT
The potential for Everett as a location for regional serving office depends on its
competitive position with respect to other office locations in Everett and South
Snohornish Eocations. Four potentially competitive locations are summarized in Table V-
5.
As evidenced by the size of existing developments in these localities, they are estabiished
office locations. Each area is located near a major interstate highway. Downtown
Everett offers similar proximity. The other locators are closer to the empioyment center
of Seattle, but regionai growth will continue to extend outward from that center. The
four competitive locations vary in size from 500,000 to one million square feet of office
development.
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PROJECTED DEMAND
Demand for office space in Downtown Everett will grow as the local economy grows and
as the Downtown increases its stature as an office concentration in the region. With
strong growth in Snohomish County, Downtown Everett shouid be abie to sustain and
exceed recent absorption of 16,000 square feet.
With its location on 1-5 and increased commercial services and amenities, Downtown
shouid also be competitive with the regional office concentrations in South Snohomish
County. Puget Sound Regional Council projects employment growth of 4,213 jobs in the
Finance Insurance Real Estate Services sectors in the Everett CBD. This represents an
increase in the CBD’s share of City-wide employment in these sectors. At 250 square
feet per employee, this job growth would require over one million square feet or 50,000
square feet per year. While not all this employment requires office space, there are jobs
in other segments that do aiso require office space. Overall, it’s realistic to project an
office space demand of 40,000 square feet per year approximately twice the baseiine rate
of recent history.
In summary, we project the demand for office development in Downtown Everett during
the next 20 years to be:
400,000 to 800,000 square feet
The office uses wouid include smali local~serving businesses such as insurance and real
estate agents and professionai service firms; as well as larger regional serving business
and headquarters operators.
Office rents should be supportable at the current average rates for the Northend market
area of $20 per square foot fully serviced.
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